Tyre major MRF Ltd. expects the current year to be a tumultuous one for the auto sector on account of various regulatory changes and the switch over to BS-VI norms.
“The next six months would see a volatile auto sector on account of the shift to BS-VI emission norms,” said K.M. Mammen, chairman and managing director, MRF Ltd, in a message to shareholders. “The tyre industry would have to align its production in line with this requirement,” he added.
The Indian automotive industry is at an inflection point where both opportunities and challenges abound in equal measure. The coming year will be witness to several landmark disruptions and changes in the auto industry which will shape the direction of future events in the industry, MRF said.
Inventory build-up
Asserting that these short-term hiccups would have to be factored in by automobile firms and tyre manufacturers, he said that the uncertainty over the next six months would be further compounded by low consumer sentiments, resulting in inventory build-up and all OE (original equipment) manufacturers aligning production in line with demand.
While anticipating an increase in scooter prices (due to BS-VI norms), volatile fuel prices and rising insurance costs, the company said that there could be some uncertainties around how the complete impact of BS-VI norms will play out during the next fiscal year.
Compliance with BS-VI norms will require higher investment by automakers in technology to upgrade vehicles in stock and in making new vehicles. This will also mean significantly reduced launches till the new norms come into force, effective April 1, 2020, MRF said.
While describing the electric vehicle segment as a sunrise industry, Mr. Mammen welcomed the incentives offered as they would have a long-term impact.
MRF would continue to follow customer-centric approach, focus on quality, ability to work seamlessly with a host of partners and trade channels combined with a high degree of innovation. This would propel the company further and ensure its dominant position in the market, he said.
